The Modi-Xi Tango: Missteps and Fluffed Lines?

Nobody expected Indian Prime Minister Narendra Modi and Chinese President Xi Jinping to wrap their arms around each other in a bear hug. A rightwing nationalist BJP-led government in India and a Communist Party of China that relies heavily on nationalism as a crutch for continued legitimacy at home were not expected to have it easy at the first formal summit of their leaders, especially on political and strategic issues.

Expectations however, were sky-high on the economic front. Some weeks ago, a figure of US$300 billion worth of possible Chinese investments in India’s infrastructure sector in the coming five years – 30% of India’s declared need – started doing the rounds. A few days before the visit, the figure touted was US$100 billion, interpreted at being aimed to put the Japanese commitment of US$35 billion in the shade. What transpired finally was US$20 billion. This might be a big step down but one must ask how realistic the initial figures were in the first place. Sure, China has the forex reserves but that is not the same as saying they will necessarily find it profitable or worth their while to invest given the difficult regulatory environment surrounding the entry of Chinese people and enterprises into India.

The fact that of the 16 agreements signed between the two countries, the expected agreement on easing of visa procedures for Chinese citizens did not materialize could have a direct link to the low final sums. If Indian policymakers linked such easing with the stapled visa issue, then they might have ended up shooting the Indian economy in the foot. Making Kiren Rijiju from Arunachal Pradesh a minister in the Indian government was statement of intent enough; the status quo on stapled visas could well have continued with little practical impact on ties.

Prime Minister Modi has been on record calling for a greater role of the Indian states in the country’s economic growth and development. There is also then the question of the capability of major Indian states to absorb and handle the massive investments being talked about. Apart from a few states such as Gujarat, Maharashtra, Andhra Pradesh and Tamil Nadu, very few have the combination of high quality of governance, physical infrastructure, socioeconomic indicators and clarity of economic purpose, including a friendly investment climate, required to attract global capital. It is no wonder then Chinese and Japanese investments remain concentrated in only a few Indian states. This is in marked contrast to China where nearly all provinces have pulled themselves up by the bootstraps to develop with the help of foreign capital and have even used this lever to win a degree of autonomy of action from the central government.

To return to the boundary dispute, Chinese incursions along the LAC and other forms of provocation on the eve of an important visit to India should not surprise Indians anymore, even if the incursions both at Depsang last year and this time at Depsang again, and at Chumar differ from the usual patterns. Policymakers and strategists cannot expect a static environment to deal with in their line of work. And despite what the media might say or report, there is no doubt that the Indian government and military have been proactive on the LAC, including in the previous UPA regime. But perhaps, Prime Minister Modi erred in taking a rather too assertive line on the dispute and discomfiting his visitor who might have been amenable to offering concessions on other fronts.

Next, the ease of access that Tibetan protestors had to the environs of Hyderabad House certainly did not happen without the knowledge of officials of the Modi government. If the idea was to send a message to the Chinese, then it was a foolish tactic. It might have pleased a certain section of Modi’s constituency but it also takes the attention away from more serious moves by the Chinese with respect to Tibet. In his public speech in New Delhi, Xi Jinping laid heavy stress on the cultural ties between the India and China including their Buddhist linkages. This should not obscure the fact that China is trying to dominate the global Buddhist discourse by organizing religious conferences – often in competition with India – and projects as the Lumbini park in Nepal. Indian policymakers have hopefully also not missed the overtures that the Dalai Lama has been making to Xi since he came to power and recent rumours in the Chinese blogosphere of the Dalai Lama possibly being invited to Beijing before long. If Xi begins to show a greater degree of accommodation, Tibet will soon cease to be a card for India and the world vis-à-vis China. And no one should doubt the capabilities or the flexibility of Xi and the Communist Party on this front.

Finally, another agreement that was missing during the Xi visit was one on information sharing by China on trans-border rivers. Over the last several years, every major visit has usually had an agreement that extended the time frame for such sharing by an incremental 15 days. While the agreements on sister-city and sister-province/state relations are an important trend for the future, it is the many agreements that appear not to have been signed during this visit that should worry those who expected the Xi visit to set the template for the future.